Inheritance tax has been a hot topic in recent months, particularly within the farming sector. Anticipation has been high whilst we all awaited potential changes with the 2025 autumn budget. In her Initial Autumn Statement, the Chancellor made only modest changes to the inheritance tax position, the majority of changes having of course being brought in in the autumn 2024 Statement.
Now that the 2025 autumn budget has been announced, let's take a loot at some of the consequences for management of your trusts:
£1,000,000 of APR/BPR allowance is transferrable
The one key change made was that the Chancellor confirmed that the £1,000,000 tax free threshold for agricultural property relief or business property relief qualifying assets will now be transferable between spouses and civil partners which was not the case when the Policy was first announced in 2024.
Many farmers and business owners had been hoping for an increase in the thresholds, but these have been fixed until 2031 as indeed has the standard nil rate band.
Placing assets into trust before April 2026
There is still the opportunity for certain individuals to take advantage of the transitional rules as until April 2026 it will be possible to settle assets which qualify for APR and BPR into a trust at a value and excess of £1,000,000 without incurring an initial charge to inheritance tax.
From April 2026 if an individual places APR and BPR assets into a trust in excess of £1,000,000 they will have to pay inheritance tax at the point of entry.
Placing assets into trust in this way can not only potentially defer inheritance tax charge but it is also possible in certain circumstances to mitigate against capital gains tax by claiming holdover relief too.
Therefore, individuals who want to carry out some estate planning but still want to keep an element of control over the asserts they no longer require should actively speak to their advisers as to whether a trust would be a suitable option for them.
What type of trust should I have?
It will be necessary to have a relevant property trust to take advantage of the tax rules and therefore careful advice as to the drafting of that trust, who the potential beneficiaries could be and most importantly what powers the trustees have will be crucial in providing rounded advice.
At Trowers we do not simply provide 'off the shelf' solutions but look to work with clients and advisors to find the best possible outcome that also provides peace of mind.
The requirement for coordinated professional advice
With pensions also being brought into the reach of the chancellor from April 2027, it is more important than ever for professional advisers to coordinate strategies with clients to ensure the most beneficial outcome for their family.
The Private Wealth team at Trowers advises entrepreneurs, families and trustees on how to acquire, grow and protect their assets.
